A CASE STUDY REPORT

ON

The Serving Spoon

BY
Group P

IN
PARTIAL COMPLETION
OF THE COURSE

NEW PRODUCT DEVELOPMENT

AT

INDIAN INSTITUTE OF MANAGEMENT, BANGALORE

(FEBRUARY, 2014)

Introduction
The company CASCO, owned by the Soi family, manufactures and sells stainless steel serving
spoons. The profits are sufficient to provide a comfortable living for the family and also and
allow for some reinvestment in business. However, the reinvestment is insufficient for rapid

growth. The family does not want to acquire funds from outside sources, due to the risk of losing
family control and operating independence. The family rightly believes that increasing
profitability is the best route to generate funds to fuel future growth.

Key Recommendations
1) Raw material optimization: Optimization software (example: Nesting and Panel
Optimization Software) should be used for reduction of scrap from the sheet metal. This
is likely to enable significant cost saving and may render manufacturing smaller spoons
out of scrap metal possible.
2) Efficient electroplating: Each spoon is separately electroplated and polished. The
operating efficiency can be improved if multiple spoons are electroplated simultaneously
in the electrolytic solution, followed by electro-polishing.
3) In-house die manufacturing: Each spoon design requires its own punch die and
embossing die. These are purchased from die manufacturers according to blueprints
supplied. The costs incurred are recovered in a few months. If die manufacturing can be
done in-house, it could save the company on these costs in the future.
4) Scrapping defective spoons: The defective spoons are currently being reprocessed. By
doing so, the company is incurring the production cost plus the reprocessing cost, and
producing a less than optimal quality spoon. Instead, the company might be better off
scrapping the defective spoons.
5) Enhanced packaging options: To improve consumers awareness of the brand, a different
packaging strategy may be adopted, wherein the consolidated package has a variety of
spoons, to suit different food items. This will also aid in its use as a perfect gift item, and
also reduces the time that the customer spends in selecting the spoons individually. Better
communication with retailers about the benefits of this packaging will help to increase its
sales.
6) Combo deals in peak season: During the marriage seasons, when the demand for
kitchenware reaches a peak, it is advisable to have combo deals of kitchenware like
utensils, cookers etc. and spoons, that help to tap into this increase in demand.

Criteria for Evaluation

The recommendations can be primarily evaluated on the following four criteria which are the key
indicators of future profitability:
1)
2)
3)
4)

Cost savings in the existing processes [Supply side]

Return on investment [Supply side]
Increased sales [Demand side]
Tapping peak season demand [Demand side]

Elaboration of Recommendations
1) Raw material optimization: The use of optimization software is prevalent in clothing
industries that deal in mass production of standardized clothing (like military clothing),
and has proven ability to improve process efficiency as the percentage of scrap produced

can be reduced significantly. At present, the percentage by weight of scrap steel produced
is 30-35%. (In clothing industries, the scrap is less than 10%). Given below is a diagram
that shows how the scrap steel can be utilized in a more efficient way.

Two
additional
table
spoons

Diagram showing better material utilization

This would entail a one-time expense in terms of the investment required to purchase the
software and training the workers on its functioning. However, with the significant cost
savings, the company is expected to cover the initial investment and benefit from a higher
ROI will be over the useful life of the machinery.
2) Efficient electroplating: The process efficiency of electroplating can be improved through
mass plating which is used for plating a mass amount of objects simultaneously (Source:
http://chemwiki.ucdavis.edu/Analytical_Chemistry/Electrochemistry/Electrolytic_Cells/E
lectroplating). The company should also deploy electro-polishing in lieu of abrasive fine
polishing which also helps to improve the corrosion resistance property of stainless steel.
(Source: http://expertelectropolishing.com/electropolishing-process/). The benefits of
employing mass plating and electro-polishing include reduction of production time,
improvement in the quality of the finished product, and significant cost savings by way of
more efficient use of equipment and power.
3) In-house die manufacturing: The company is currently spending $350-430 on each set of
punch die and embossing die. Instead, the company should invest in purchasing its own
die manufacturing machine. Again, this would entail a high one-time investment.
However, in the long term, the company will be able to save on costs incurred on each
new spoon design. It will also give the company the freedom to test new designs and
withdraw them from the market if it turns out to be unsuccessful, with significantly
reduced spending on the new spoon design die.
4) Enhanced packaging options: The idea of the consolidated package is, in particular,
aimed at those customers who view the product as a reasonable gift item. The customer
has to no longer bear the pain that is associated with choosing the right variety of spoons.
The company at present packs each spoon in individual plain transparent polythene
covers. By using a consolidated package with branding, the customers awareness about

the brand can be improved. This will require some additional investment on packaging
equipment. To overcome this, the company may consider outsourcing this job to firms
involved in packaging business. If this can be done on a large scale, the cost of packaging
of each product becomes negligible compared to the overall price of the product. The
appeal of the package as a gift is likely to be very high for customers, increasing sales.
5) Scrapping defective spoons: CASCO purchases high grade steel sheets. Hence the
percentage of defective spoons is assumed to be low. Hence, it would be a better option to
scrap them, instead of incurring additional cost on reprocessing. This will also save the
time that is spent on reprocessing. The company gets 38-40% of the purchase price on
scrap of high grade steel. Also, by avoiding reprocessing of defective spoons, the
company can ensure better uniformity in the quality of the final product.
6) Combo deals in peak season: To cater to the peak demand seasons, the company might
consider having a tie-up with other firms that manufacture kitchenware like cookers,
utensils, stoves, mixers etc. In doing so, the company will be able to expand its
distribution channels, and reach a larger strata of customers. If tie-up with other firms
proves difficult, CASCO may leverage its contacts with key retailers to initiate this
concept of combo deals.

Implementation: Action Steps

The necessary action steps are enlisted and prioritized basis ease of implementation and required
investment:
1) Purchasing optimization software and get its workers trained in its usage. The training
period, in general, is no longer than a week. [Phase 1]
2) Change in process to scrap of defective spoons going forward [Phase 1]
3) Launch of the consolidated package in the high demand seasons of festival and
marriage. Packaging equipment may be purchased, or the task may be outsourced to
firms that do custom packaging after a detailed cost evaluation. [Phase 1]
4) Entering into a tie-up with firms that manufacture other kitchenware items or influence
the retailers to promote such combo deals [Phase 2]
5) Purchasing the equipment required for mass plating and electro-polishing. [Phase 2]
6) Purchasing its own die manufacturing machine. [Phase 3]

Conclusion
In order to improve the profitability to enhance higher reinvestments in the future to fuel growth,
CASCO should implement the aforementioned recommendation. Some recommendations
involve reasonable one-time investments, but these are expected to be easily recovered by way of
increased cash flows in the future and reduction in present expenses. At the same time, a detailed
cost analysis and ROI calculation is advisable in order to further validate the same.